How Can Detroit Bounce Back After Bankruptcy?

Detroit’s bankruptcy process could take a year or more. But development experts who focus on the Great Lakes region say the city and the nation must get smart about its medium-term future now. If state, local, and national policymakers work together to take advantage of its geography and industrial infrastructure, while recognizing that it must consolidate, the future can be bright.

Detroit’s geography will play a crucial role because the city sits on the border with America’s largest trading partner. “There are lots of advantages: access to the Canadian market, importance as a transport center for goods,” said Thomas Sugrue, a professor of History and Sociology at the University of Pennsylvania and the author the book on Detroit The Origins of the Urban Crisis. The city will also have to shrink to be strong. According to Rolf Pendall, Director of the Urban Institute’s Metropolitan Housing and Communities Policy Center, “It’s not about ‘are we growing again,’ but ‘are we doing a better job at providing vibrant and well-supported neighborhoods.” Success can’t rely on bringing the whole city back, but rather identifying the parts of the city that can flourish. “The bones are there, the street grid, the buildings — it’s not rebuilding Detroit, but building the next Detroit, and it’s going to be in those neighborhoods,” he added.

Pendall isn’t alone in suggesting that so-called Rust Belt cities that have lost the industrial potency that once made them prosperous must be compact in order to be flexible enough to adapt to the next phase of their economic identities. Over the weekend, Nobel Prize-winning economist Paul Krugman contrasted the sprawl in the Detroit area with the concentrated growth of Pittsburgh, a potential case study for Detroit, and concluded its model “improved its ability to adapt to changing circumstances.”


The problems that plague Detroit don’t just belong to the city, however, but also affect the region, specifically the sprawling metropolitan area that is increasingly vacant as younger people move away and older people pass on or retire to warmer climes. “Detroit is not a unique case. What’s been happening in Michigan is that the young people have been leaving the state,” Pendall said. “People in their twenties are leaving the state faster than they’re coming in.” That migration out of Michigan leaves the Detroit area with massive amounts of unneeded, vacant housing as the young people who were supposed to start the families that would fill them instead settle where job prospects and weather are better. The resulting mismatch of policy to place is staggering in scale: the Michigan government issued 4.5 times as many permits to build new homes as there were new households formed in the state in 2010, Pendall noted.

American economic policy also has a big role to play in bringing Motown back, Pendall said. “In the United States, we haven’t protected and promoted and rebuilt our manufacturing sector. Instead we promoted free trade, so we’ve had huge growth in financial centers and decline in traditional manufacturing nodes.”

And Detroit’s manufacturing future must be less dependent on the auto industry and more engaged with that industry’s clean energy future. High gas prices make the auto industry, Detroit’s primary economic strength, into an Achilles heel when car sales plummet, but cars will still play an important role in the city’s future. “Training people both to engineer and build electric cars, repair and maintain them — that’s a place where some of Detroit’s technical advantages can help them,” Sugrue said. But he quickly cautioned that depending solely on manufacturing for a comeback won’t be a smart bet.

Tourism may also be one part of Detroit’s new identity, but it won’t be enough to support the city’s revival on its own, Sugrue added.

Lawmakers will also need to keep in mind the history that led Detroit to this point. “Massive disinvestment and depopulation, racial tension between the city and suburbs, growing state and federal withdrawal from urban policy — those all have had significant consequences,” Sugrue said. The divide between the city and its surroundings has fed the sprawl for reasons beyond Detroit’s control, as the easiest places to build attract investment capital, Pendall said. “There’s this wicked spiral that goes on, where it’s cheap and easy to build on the fringe, and anything that might hold its value for longer, like houses in the inner suburbs, gets written off.”


Remaking Detroit into a smaller, more flexible, more Pittsburgh-like place will require serious investment, financially and politically, and while the conversation about the bankruptcy so far is localized, it needs to be national. It is “very unlikely that Detroit’s going to be able to pull out of this crisis on its own,” Sugrue said. “One thing we saw in previous bankruptcies and near-bankruptcies is the government stepping in to bail cities out. We’re not seeing that with Detroit today.” On Sunday, Detroit mayor Dave Bing (D) held the possibility open that Congress could step in to help the city bridge its $18 billion budget gap, but Gov. Rick Snyder (R) said “I don’t view that as the right answer” later the same morning on another show.

That attitude needs to change, according to Pendall. “You absolutely have to talk about a federal-level coalition and a federal-level solution,” he said, emphasizing that Detroit is far from alone. “Chicago is not immune. Buffalo has gone through one round of this and has another coming. So many of these forces have been building for so long, for generations, that we need to figure out what the next normal is going to be for the Great Lakes.”